Platforms contacting advice clients without adviser knowledge
A number of financial advisers are reconsidering their platform relationships after some platforms directly contacted clients, without the advisers’ knowledge, regarding the legislative changes around the annual adviser fee, according to WealthO2.
The legislation, the Financial Sector Reform (Hayne Royal 4 Commission Response) Bill was passed last week which would require superannuation fund members to consent annually to trustees to deduct ongoing adviser fees from 1 July, 2021.
The firm’s managing director, Shannon Bernasconi, said advisers were unhappy to discover their platform provider had been contacting their clients about potential changes to their fees without notifying them.
“This isn’t the first time that some platforms have contacted clients of advisers – we saw similar instances when fees and commissions were turned off by some platforms well in advance of legislation,” she said.
“No doubt the platforms believe they have good reasons for taking this step, and circumventing the adviser’s relationship with their clients. They may claim that it is a regulatory requirement, or perhaps an action to reduce liability. Another reason may be that they lack the technological ability to obtain consent in a more adviser led or digital way.”
Bernasconi noted the banks’ exit from wealth management and advisers moving away from aligned distribution had changed the way adviser groups selected and used platform providers.
“We find it surprising that some platforms have chosen taken a very blinkered approach with advisers, which doesn’t take into account the annual review process where the client is consenting to fees already,” she said.
“Many platforms also don’t have the ability to generate a digital consent-based workflow and revert to a paper trail, adding more administration to the adviser process.
“Another consideration for advisers are the providers who have integrated digital signatures and alignment of adviser opt in and annual fee arrangements with the reform requirements.
“Such offerings provide advisers with control of the narrative and branding of communications with their clients, which can give both sides greater peace of mind.”
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